Weak UK laws letting crooks launder wealth

Nick Maxwell: He says the UK's asset recovery regime is not fit for purpose.

Published:08:29Wednesday 10 June 2015

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it is “too easy” to launder illegal wealth through the UK and the regime for seizing corrupt assets is “not fit for purpose”, a report claims.

Authorities have “limited powers” and must work in a system that is overly reliant on achieving a conviction against individuals in the country where the money was stolen, Transparency International said.

The charity said a “very large” amount of corrupt wealth, stolen from around the world, is invested in the UK.

A group of experts focused on suspicious activity reports (SARs) that businesses are required to submit to police if they are suspicious about a transaction or activity.

Data shows that there are around 14,000 “consent” SARs that are so suspicious that the private sector asks for permission from law enforcement to handle the transaction.

Transparency International said new figures revealed in its research suggest that only a small proportion of suspicious activity linked to the highest level of international corruption is acted on.

In 2014, a total of 94 consent SARs, which were potentially linked to the proceeds of “grand” corruption, were referred to the proceeds of corruption unit (POCU), which was part of the Metropolitan Police until it was moved to the National Crime Agency earlier this year.

Seven of the 94 referrals, which related to transactions or activity worth a combined £113.3m, were deemed so suspicious that POCU refused consent for them to be completed, the study claimed.

It added: “However, this is recognised by law enforcement experts as only a very small proportion of the wider threat.”

It said that laundering the proceeds of corruption is not unique to the UK but the country is “well placed” to lead international efforts to recover them because of its position as a leading financial, real estate and luxury goods centre, as well as the quality and expertise of law enforcement agencies.

“The UK’s performance in freezing, seizing and recovering those assets, while relatively strong compared to other countries, is undeniably very limited compared to the scale of the threat,” it added.

Grand corruption has been defined by the United Nations as pervading the “highest levels” of government, leading to a “broad erosion of confidence in good governance, the rule of law and economic stability”.

Earlier this week HSBC was ordered to pay a record £28m fine for “organisational deficiencies” which allowed money laundering at the bank’s Swiss subsidiary.

Nick Maxwell, Transparency International UK head of advocacy and research, said: “The UK’s asset recovery regime is clearly not fit for purpose and it is far too easy for individuals to launder their corrupt wealth through the UK. This failure is down to the limited powers UK law and enforcement agencies have to seize corrupt assets.

“The UK is well placed to lead on international efforts to recover the proceeds of grand corruption.”

Transparency International suggested introducing a new civil tool called an “unexplained wealth order”.

A spokesman for the National Crime Agency said: “The report raises some valid and interesting points that we now need to examine in detail as part of the ongoing UK Anti-Corruption plan actions.

“The NCA is committed to tackling corruption and bribery and appreciates the work undertaken by Transparency International.”

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